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Money is a medium of exchange, according to 1,000 ways to make $1,000.

Currency, on the other hand, is the "promissory note or coin". You may say that currency is a US dollar bill in the USA. But the definition of a promissory note is a "signed document saying that you will pay this much on this date." But there's no signature on the coin.

Is currency a subset of money?

Jossie Calderon
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7 Answers7

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Money in that context has two kinds of common usage:

money noun 1 A current medium of exchange in the form of coins and banknotes; coins and banknotes collectively. ‘I counted the money before putting it in my wallet’ 1.2 The assets, property, and resources owned by someone or something; wealth. ‘the college is very short of money’ - lexico

Money is an economic unit that functions as a generally recognized medium of exchange for transactional purposes in an economy. - investopedia

Currency, on the other hand, relates a lot more strongly to the underlying physical expression of money:

currency noun 1 A system of money in general use in a particular country. ‘the dollar was a strong currency’ - lexico

Currency is a medium of exchange for goods and services. - investopedia

So money is a more abstract concept, and currency more concrete. You can talk about money without referencing notes or coins, but you can't talk about currency without referencing them.

Community
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Lawrence
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    These dictionary entries are utterly useless in this case. – Fattie Nov 01 '19 at 13:19
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    Do bitcoins qualify as currency? They are referred to as "cryptocurrency", but they have no physical representation. – DoctorDestructo Nov 01 '19 at 15:05
  • @DoctorDestructo It's virtual currency. – Barmar Nov 01 '19 at 16:17
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    @Barmar so it sounds like that's a "yes". Which seems right to me. I've always understood the word "currency" to be more about who defines and vouches for the system than what physical form it takes, but I could be mistaken. – DoctorDestructo Nov 01 '19 at 16:48
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    @DoctorDestructo I like the answer's distinction that "money" is more abstract. Currency is a specific type of money, such as dollars, pesos, bitcoins. – Barmar Nov 01 '19 at 17:21
  • @DoctorDestructo There's a decent argument that cryptocurrencies operate as commodities more than currencies, but that argument seems to me to be (increasingly) specific to particular cryptocurrencies, regions, and categories of economic activity. They have many currency-like features, either way, but it's an issue for a separate question rather than comments, I think. – Upper_Case Nov 01 '19 at 17:52
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    @Fattie They demonstrate the ways in which the words are used - see especially the two Lexico definitions for money. – Lawrence Nov 01 '19 at 17:55
  • @DoctorDestructo Yes, even seashells (or rum, in part of Australia's convict settlement history) qualify as currency if they are accepted as a medium of exchange. The thing that makes something 'currency' is that it is the token by which financial value is conveyed from one party to another. – Lawrence Nov 01 '19 at 17:57
  • @Lawrence So, do you think that currency needs to be expressed physically? Your answer seems to imply that it does, but I wasn't sure that was your intent. I do like the dictionary definitions. – DoctorDestructo Nov 01 '19 at 18:10
  • @DoctorDestructo No, currency doesn't need to be expressed physically, so long as it is the unit of exchange that is considered. By way of analogy, consider how you talk about how good you are at something: you can be proficient (cf 'money') or you can have good grades (cf 'currency'). One focuses on the concept while the other focuses on the units of measurement. – Lawrence Nov 03 '19 at 15:03
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Really simple answer: What's in your bank account is money. Those nicely-engraved pieces of paper in your wallet are currency (and also money).

In other words, the money in your account has no actual physical existence, it's just accounting. The bank has some currency, of course, and will give it to you if you have money in your account, or will take currency from you and add it to the money in your account. But the currency the bank holds is only a small fraction of the money in its accounts.

Nosjack
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jamesqf
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  • I think you could also say that bank account deposits form a currency (which is different from the actual paper one!) – user253751 Oct 31 '19 at 17:37
  • @user253751: I don't know about that. If I write a paper check on my account, is that currency? How about electronic transfers when I pay bills? I wouldn't think so, but that's just my opinion. I'll defer to anyone who has a better explanation. – jamesqf Nov 01 '19 at 01:32
  • If I write an IOU about paper money, is that currency? How about the act of giving paper money to someone else, is that currency? – user253751 Nov 01 '19 at 09:22
  • @user253751: I wouldn't think an IOU is either money or currency. It's just a promise, which may or may not be kept. Giving paper money to someone would be USING both currency and money - currency is always money (barring unfortunate political events), but most money is not currency. So I can give someone money by electronic transfer from my bank account without using currency. – jamesqf Nov 01 '19 at 16:16
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    Currency is not (solely) physical paper/metal. – Joe Nov 01 '19 at 16:20
  • @jamesqf Aren't those "nicely-engraved pieces of paper in your wallet" simply IOU's issued by the government? While we don't have the gold standard any more, that was their original purpose. – Jeremy Holovacs Nov 01 '19 at 19:43
  • @Jeremy Holovacs: No, they're not IOUs, and haven't been since the US stopped printing silver certificates, because the government will not give you anything else for them - except in the same sense that a business would provide goods & services in exchange for currency. So if I want say a firewood cutting permit for the USFS, the government person will take my currency in the form of a $20 bill, or will (I think) accept a check or credit card for that amount of money, just as e.g. the gas station will accept cash or credit card. – jamesqf Nov 02 '19 at 02:16
  • Bank deposits, however, are IOUs from the bank to yourself. The bank promises to give you a certain amount of paper money on request. Trading the IOUs is easier than trading the paper money. (by the way, you have to wonder when the "paper money standard" for bank deposits will end. Paper money is to bank deposits what gold was to paper money) – user253751 Nov 02 '19 at 13:39
  • @user253751: No, a bank deposit is not an IOU. An IOU is an informal promise, nothing more. – jamesqf Nov 03 '19 at 16:56
  • @jamesqf When we were on the gold standard, paper money was literally an IOU... that was the origin of all paper money. Though we now declare value by fiat, it doesn't change the fact that the basis of paper money was a promissory note issued by the government to exchange for gold at some later point... that's what I'd call an IOU. – Jeremy Holovacs Nov 04 '19 at 04:29
  • @jamesqf A bank deposit is a formalized IOU with certain legal requirements. – user253751 Nov 05 '19 at 12:44
  • @user253751: See above, or consult a dictionary. When the "IOU" becomes formalized, it is no longer an IOU, but a contract. – jamesqf Nov 06 '19 at 17:17
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People seem to be a bit over-prescriptive here about the definitions and uses of money vs currency. They are partial synonyms and at some points one may be able to draw a distinction - othertimes not. Currency also has some wider/alternative definitions as well.

IN ECONOMICS

Conceptually, from an economics perspective, there are three key properties of something that is money: it is a medium of exchange, a store of value and a unit of account. These are all somewhat inter-related - liquidity in exchange, and consistency in pricing between goods and over time are mutually reinforcing.

There are common properties to things that work successfully as money that they are likely to share to a greater or lesser degree: to be light, discrete, robust, and be in sufficient but stable supply.

This is why at various time and places different things have achieved currency as money: shells, commodities, promissary notes, cigarettes, etc.

[[ ADDED ]] Central banks and economists distinguish between "narrow money" (coins and notes and other banks deposits and the central bank) and various definitions of "broad money" adding on other non-physical money (retail bank deposits, bank-issued noted and bonds, inter-bank lending etc).

IN ETYMOLOGY

"Money" derives ultimately from the Latin name for a mint where coins were made while "Currency" derives from the Latin for "running", "moving", "in circulation". But "money" no longers refers exclusively to physical coins.

IN LANGUAGE

In terms of practical use of language:

"Money" by itself usually refers to a form of money that is relevant to the conversation at hanf: E.g. "Do you have enough money?" is a question about whether you have sufficiente funds to hand in a form you can use. The meaning changes if I am standing infront of a carpark ticket machine that only takes coins (money = coins), signing on the dotted line for a new car (money = content of current account), or contemplating buying a new car soon (money = easily realisable savings).

Even "cash", which usually refers to physical notes & coins is sometimes used differently in, say, company accounts. "Cash-back" at the supermarket EPOS terminal means notes; "Cash-back" in a sales promotion probably means a cheque.

"Currency" can be descriptive - something can have the property of "currency" - as well as being a thing that circulates in the economy. It is more frequently used when referring to a specific unit of money in the abstract - Dollars, Sterling, Euros etc - particularly in a comparative context - e.g. international currency exchange. So I might consider the USD a "hard currency" or go to the Bureau de Change to change money into a different currency.

But I can jam most of these words in to most phrases without very much risk of being misunderstood, even if it sounds a bit off to a native speaker.

Duke Bouvier
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Yes. Currency is the bill or coin issued by the government to symbolize the money.

However, "money" can be a huge variety of concepts.

Say every week, Karen the lawyer stops by the halfway house and gives Thomas two crisp $100 bills. Thomas doesn't have the capacity to know this, but Karen manages on Jim's behalf. This has $1 million of capital, and is invested for long-term growth in the stock market. A trust fund like this could be drawn down at 4-7% a year. $10,400 a year is only 1%, but this is making the fund's capital significantly grow. This is so the fund will be able to produce $100,000+ per year in the future, which is vital, because Thomas's medical needs are expected to be much worse.

The two $100 bills are currency. This stuff we're talking about in terms of managing the trust fund, is money.

Harper - Reinstate Monica
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I'll explain properly since everything on here is confused :)

Currency is a descriptive, not definitive, term.

It simply means

"anything that is, at present, popularly used as payment and will be widely and generally taken as payment"

That's all it means.

So for example, within Disneyland, those DisneyBucks pieces of paper, you could indeed describe as currency. It would be reasonable to state "DisneyBucks are currency within Disneyland, but really you can't use them much if at all outside Disneyland."

It would be perfectly reasonable to state "US Dollars are, of course, currency anywhere in the US, and also in certain developing countries. In say France or Australia, US Dollars are not currency, they are not of course popularly used as payment and will not be widely and generally taken as payment."

So that's all "currency" is.

At different times "government paper money" has been currency, "shells" have been currency, "military scrip" has been currency, "private banking notes" have been currency, and so on.

Let's say there was some sudden financial cataclysm in the US (or any country, just the US for example) and the US government money suddenly hyperinflated and became comic, nobody would accept it for payment or exchange. Then, we would say "Wow, look what's happening in the US, the UUSD is not currency anymore."

Here's a great example. In fact in many situations the US one hundred dollar bill is not currency currently.

As anyone who, uh, launders huge amounts of paper money or is a major drug lord will tell you, large-denomination bills are no good: the only thing that is current ("that will be widely and generally accepted") are smaller-denomination bills.

Over in Europe there's a 500 Euro bill; I would say it's not really currency; generally folks won't accept it. "Currency" means widely/universally accepted as payment (in the area/time in question), I've found 500 Euro bills are really not currency.

So from the question, "Currency, on the other hand, is the "promissory note or coin"" That's totally and completely wrong on many levels. (A "coin" can just be a promissory note, or, it can be simply a token, or it can be literally some bullion.) Currency may or may not have any connection, at all, to "promissory notes" - again apparently "shells" were a popular currency in some milieu. On the other hand no-one actually knows what the US Dollar is (it is explicitly deliberately undefined, other than that the government there asserts "it" can be used for tax payments), but US Dollars (excepting large denomination notes) are absolutely current.

Note that "current" is just used in the normal meaning of the word...

So for example, it's totally normal to say "K-Pop music is current!" simply meaning it's popular, whereas jazz say is not really current today.

"Current" means nothing more than "currently popular".

Regarding "What is money" ? This is simply definitional. Various experts will give you their definitions of what they, in their academic writing, consider money.

It's completely normal to consider only gold "actually money". (So, the three or four most powerful figures in fiscal matters of the current era - think this.) Other say money is a "medium of exchange". OK. Other say money is "a function of the current social power structure", again perfectly reasonable (I defy anyone to "not need" USD or Euros). And so on.

It is utterly, utterly, pointless arguing about "what is money", because it's purely definitional.

(Consider say the question "What is a 'Symphony'?" I don't know or care, but various musicologists over the centuries, and today, would have various and different stated definitions of what a Symphony is. There is utterly no "answer" to "What is a Symphony"; it's just a term used by academics and others, and all you can do is write down the various meanings stated by each of those persons.)

So "money" is just definitional; it's utterly pointless/meaningless to "argue" about "which" definition you support or whatever.

"Currency" is a factual thing.

If I told you "US Dollar notes are currency in Anguilla", that is an observable, checkable, fact. I could literally take you there (ideally checking in to Cap Juluca!) and one could observe and check that US Dollar notes widely/universally accepted as payment/exchange.

So that's it.

Fattie
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Currency is anything people use to exchange for goods and services. Money is currency that keeps it's value over a long period of time. Dollars, Yen, Euros are all examples of currencies, but they are not money. Only Gold and Silver is money.

"Gold is money, everything else is credit" - JP Morgan

user1781498
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    Most countries abandoned the Gold Standard a while ago. And using the pre-currency barter systems as contrast, then gold used to be credit just the same. – Gloweye Nov 01 '19 at 09:14
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    The assertion that "gold" is immune from devaluation is historically disproven. The colonial Spanish economy from the 15th-17th century was famously wrecked by gold devaluation after they took too much from South America without an increase in domestic productivity. https://en.wikipedia.org/wiki/Price_revolution – user662852 Nov 01 '19 at 13:51
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Currency vs Money are the two words that are used in our everyday life and are often confused as being the similar thing. The terms Money and Currency at glance would appear to be synonyms but they are not, Money is for payment :) currency is worldwide known

Cambodia Alexo Designer
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    I am not sure what this answer is supposed to say. Maybe it's trying to make a point that a currency isn't a "real" currency unless it's convertible? (which would be wrong) – Philipp Nov 01 '19 at 10:20
  • I am sorry if there is difficult to understand, Currency vs Money are the two words that are used in our everyday life and are often confused as being the similar thing. The terms Money and Currency at glance would appear to be synonyms but they are not – Cambodia Alexo Designer Nov 01 '19 at 10:23
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    Can you edit your answer and tell us more about what these differences are? – Philipp Nov 01 '19 at 10:24
  • Thanks you very much for teaching – Cambodia Alexo Designer Nov 01 '19 at 10:28
  • @Philipp They are both Fungible , where any given unit is the same value as another (excluding historical notes or misprints for example) – Criggie Nov 03 '19 at 00:31